GM USA?

The LAT’s Pulitzer-winning car critic Dan Neil makes an interesting case for the government nationalizing the auto industry, especially General Motors.

For one, he says their cars aren’t half bad:

From my perch, as someone who drives all of the Big Three’s North American product offerings, I think a lot of the anger is reflexive and misplaced. Detroit makes some amazing cars, and anyone who thinks otherwise should hold a Corvette ZR1 to his head and pull the trigger. The Ford F-150 pickup I drove last week flat-out humbles rivals from Toyota or Nissan. Considering that the domestic carmakers are shouldering titanic “legacy” costs — it’s estimated that $2,000 in healthcare, pension and employee post-retirement benefits are baked into the price of every UAW-built vehicle — just being competitive in any segment is a signal achievement.

I’ll take his word for it since he drives more cars than I ever will, but I’m never impressed with Detroit-made cars when I rent.

This makes sense, though:

To be clear, I mean that the federal government should buy GM; forget rathole loans or nonvoting equity shares. The company’s stockholder value has been essentially wiped out. The company’s enterprise value — the lock, stock and forklift price — is about $32 billion; its total debt is $45 billion. Let’s make GM an offer.

If you feel the gall of free-market ideology rising, consider that the measures being bruited about as preconditions for a bailout — firing GM’s top management; forcing a bankruptcy-like renegotiation of contracts with the UAW, suppliers and dealers (it has too many); and creating a czar of product development to force the building of green cars — are nationalization in all but name. I say embrace it. GM-USA…

GM is competing with companies that are quasi-national now. If you consider the advantages the government of Japan has bestowed on Toyota, Nissan and Honda — in terms of healthcare and retirement benefits for its employees — the unevenness of the field is clear. The same goes for most European companies, and the rising rivals in China will enjoy similar state-subsidized advantages.

Good points, but one thing I’d like to have seen Neil address is how would politicians (especially ones elected with labor’s help) make the hard decisions—like layoffs and wage cuts—that seem to be necessary to turn the industry around? Maybe something like the base-closing commissions?

Nevertheless, it’s a column worth chewing on.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.

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